Ajcon Global has come out with its report on Advanced Enzyme Technologies IPO. The research firm has recommended to "Subscribe" the IPO in its research report as on July 20 , 2016.
Ajcon Global in its research report on Advanced Enzyme Technologies IPO.
Advanced Enzymes is the largest Indian fully integrated enzyme company, engaged in the research and development, manufacturing and marketing of 400+ proprietary products developed from 60 indigenous enzymes. Having more than two decades of fermentation experience in the production of enzymes, the Company ranks among the top 15 global companies in terms of enzyme sales, and have the second highest market share domestically, next only to the world’s largest enzyme company Novozymes. Competitors include players like Biocon, Novozymes (Denmark), DSM Nutritional Products, DuPont Danisco, Amano Enzymes (Japan), AB Enzymes (UK), and BASF. The Company operates in two primary business verticals namely Healthcare & Nutrition (human and animal) and Bio-Processing (food and non-food).
Investment Rationale and Recommendation
At the upper end of the price band of Rs. 896, the IPO is valued at 25.5x at FY16 Post issue P/E which is cheap as compared to its immediate global peer Novozymes (P/E of 35.5x). With due consideration to factors like a) largest Indian enzyme company, b) specialized business model with high entry barriers, c) diversified product portfolio and wide customer base, served by a strong sales, marketing and distribution network, d) established long – term relationships with its clients, e) financial stability and stable cash flows, f) lean balance sheet with virtually no debt, i)robust OPM at 47% and decent ROE of 38%, j) first player in Indian enzymes market tapping equity markets, we recommend investors to “SUBSCRIBE” the issue.